I have my "perfect" party formation. Fighter and Rogue up front, dual-wielding. Fighter with *Light Sword* and Diamond Eyes, Rogue with *Light Sword* and Stiletto (no Bloodlust and Thieves' Dagger because I want him uncursed). Valkyrie and Ranger on the flanks, with extended-range Dread Spears. 2 Bishops protected in the center, with extended-range Staves of Doom.

For range, I have 2 crossbow users, 2 bow users, and 2 sling users. This spreads out ammo consumption. Fighter and Rogue with Siege Arbalests, Valkyrie with Strong Bow, Ranger with Eagle Eye Bow, Bishops with Wrist Rockets. They are using Ferro's best ammo (Mystic Arrows, Lightning Bolts, Medusa Stones).

Note that all of these items are buyable, findable, or farmable pretty easily. In my opinion, this is as good as it gets.

Generally, I leave the “front row” empty and just use middle and back. The “middle” becomes “front” and even the side characters are treated as being “front.” Ignore the formation picture that makes it seem like one is further out, they are treated as the same.

Characters with less damage potential should use weapons with status effects. I don’t really put a lot of thought into Wiz 8 since raising a couple levels solves most party balance issues and min/max’ing isn’t ever needed, and you’ll likely still feel like you did too much of it by endgame, anyway.

It depends largely on party setup. The Fighter and Rogue are probably the most tanky in my party, so they're up front, taking most of the hits (The Fighter has very high HPs, Reflextion, and can wear the best armor, while the Rogue has Stealth and Reflextion, giving him the best AC in the party). Compare that to classes like the Ranger, who can only wear medium armor, only have average HPs, and are at best mediocre at melee combat. These classes aren't really suited for front-line combat, so I put them on the flanks, where they aren't hit as much.

This is why I gave my Bishops Staves of Doom, so the status effects would make up for their lower damage potential. It's probably me being a perfectionist anyways, farming all those items.

I wouldn't go Reflextion on a character with Stealth. Thing is, a character with high Stealth will be attacked less often, and therefore you won't get the benefit of Reflextion as often.

You're better off focusing on raw damage with the Rogue.

If you want a character with Reflextion (or Iron Skin/Will, for that matter), it should be someone who doesn't get Stealth.

The Rogue will likely max Stealth and Reflextion, due to maxing Strength and Dexterity early. Even with light armor, my Rogue has better AC than everybody in the party.
Edit: Even with Stealth maxed, the Rogue can max Reflextion, simply by having him up front with a target (Fighter in my case).